On Wednesday, the financial regulator warned in Dublin that the European Central Bank is worried by the impact of political pressure on the banking system.

"It shows you the danger of dealing with highly-regulated financial institutions that have a lot more constituents than just shareholders," said Porter Collins, managing member at Seawolf Capital in New York, which bought PTSB shares in the placing.

The issue "muddies the story of what has otherwise been a fantastic turnaround at the bank and in Ireland."

The Government's campaign against the banks and high variable mortgage rates helped push PTSB's shares down as much as 10pc in Dublin after they were sold at the top of an indicative price range.

It also highlights the pressures facing banks as the Government readies the disposal of a stake in AIB, in what promises to be one of Europe's biggest share sales in recent years.

"The government will approach the pricing of AIB differently," said John Cronin, an analyst with Investec in Dublin. He believes shares in AIB will be sold cheaply to avoid a repeat of Permanent TSB. "There's a real risk in going too aggressively in pricing AIB, as it could really sour investor sentiment towards Ireland." (Bloomberg)